2012: Update on Buffett's hedge fund bet.

WARREN BUFFETT: OK, we’re at noon, roughly.

I made this bet four years ago with a group at Protege Partners about the S&P versus — or an index fund — versus five funds of funds. And I told them at the time I’d put up the results every year.

And as you can see — I can’t see it from here, but the first year they — it was a huge down year. And as you might expect, just like us, we beat the S&P a lot in a down year and the last three years, the S&P has beaten them, but we’re still a tiny bit behind the hedge funds at the end of four years.

There’s six years to go. You might find it interesting, we each bought a zero-coupon 10-year bond so that there would be $1 million to go to the charity of — selected by either them or by me, depending on who won the bet — and that zero-coupon bond has performed magnificently, much better than Berkshire. (Laughter)

We should have bought nothing but zero-coupon bonds. But the zero coupon bond, because interest rates are so low, you know, is practically selling at par, so we have petitioned the stakeholder in this case — and I don’t think we’ve heard yet — but to let us sell the zero-coupon bond and put the money in Berkshire. And I’ll guarantee them that it will be worth more than a million bucks at the end of 10 years.

But so far, the best thing you could have done was ignored both of us and just looked at where we were putting the money.

And I will keep you up to date on this bet as we go along and we’re having a lot of fun.

We’ll come back in an hour, and then we’ll go till 3:30, and then we’ll have the business of the meeting.